Consumer Reports Says Leasing is the Right Financial Choice for Today’s Electric Vehicles

For electric vehicles, leasing is the way to go right now, says Consumer Reports.

Or Lease Me for as Low as $199 Per Month

We certainly agree, especially since there are several options out there in the pure electric space that cost only $199 per month to lease.

Consumer Reports takes a slightly different approach in explaining why leasing an EV is wiser than buying right now. Here’s some of what Consumer Reports has to say on the topic of EV leasing:

“We think it makes sense to lease electric cars, because the battery technology is unproven and represents a financial risk to consumers. If you were to buy an electric car for the long term, it’s unclear how long the battery might last or how much it might cost to replace in several years. On the other hand, what is clear is that automakers, suppliers, and the government are putting tremendous resources into battery development, so the next generation of electric cars are likely to be more capable, even as their batteries cost less. That means today’s technology is likely to become obsolete quickly, which could have a negative effect on resale values.”

Lease Either of These for $199 Per Month

There exists attractive lease deals on several electric vehicles (see graphic from Honda above). These deals are mainly in place now because automakers are trying to meet “state and federal requirements” as quickly as possible, says Consumer Reports.

The consumer publication says that leasing essentially moves all financial risks from the consumer over to the automaker (or lessor) and, though buying is often the more sound financial choice, that’s not so true in the case of today’s ever-evolving electric vehicles.

Consumer Reports closes by saying that leasing “is the most enticing way of getting into zero emissions motoring virtually risk free.”

It is also the easiest way financially to get into an EV. Take my Volt, for example. I could not afford the payments on a $46,000 car for 5 years even with the $7,500 tax incentive. I’d be looking at a monthly payment of over $800. But I could certainly handle a $2,000 downpayment and a $338 monthly payment.

My opinion is that the arguments based on a single lease period for obsolescence and resale value are flawed, and should use longer time scales.

I may be proven wrong, but I don’t foresee any significant improvements in batteries arriving to market in the next 2-3 years (how much have they improved in the past 2-3 years?). That means if you’re waiting for batteries to improve significantly in performance (not just a few percent), you may be waiting 2 or even 3 lease periods. Given that Prius batteries have lasted easily that long, and that Nissan has an 8 year warranty on the battery (relevant if you live somewhere that the battery will degrade rapidly, like Arizona), I think it’s easy to believe you’ll be fine with a purchased battery for the length of ~3 lease periods.

I do believe that the cost of batteries (and thus the EVs) will come down over the next few years, but the government incentives may also come down, negating some of the cost gains. And we know that while leases are constant rates, resale value losses aren’t, swinging the financial benefit towards purchasing as the lease length grows. Just keep that in mind if you lease now and find yourself with only mildly improved EVs to chose from at the lease’s end.

I too am not worried about the longevity of the batteries, especially considering the long warranties that are provided by the manufacturers. However, I wouldn’t rule out the possibility of a vastly improved battery in the next 1-2 years. The thing is, there is no way to really know. The manufacturers aren’t going to tell us if it is coming down the pipeline because it would kill sales of current products.

Thanks for your comment, David. I would agree if it were the auto manufacturers who are developing the batteries, but I don’t think they are (they’re busy developing the cars, and generally don’t have such research in-house). While any research lab that makes progress is going to make sure it is known (seems to me that they’ll publicize even potential, but not yet realized, improvements, so that they can keep getting funds).

The automakers may not be developing the batteries at the chemistry and materials level, but even after an independent battery maker “releases” the product an automaker still has to spend 2 or more years doing validation and field testing before they can put an 8yr/100,000mi warranty on a new technology battery pack sold to a customer.

The Consumer Reports explanation was precisely our rationale when leasing our Leaf rather than buying in summer 2012.

And indeed, the 2013 Leaf already has 15% longer range and double the L2 charging speed.

The technology is young (in terms of mass-market experience), so it can and *will* improve in multiple ways besides narrowly defined battery energy density. The Leaf and the slew of sub-compact EVs coming out this summer, are all at a place where each modest improvement to range or charge means a whole lot in terms of what the vehicle can do for you. So being stuck trying to get rid of 5-year-old EV when the current mass-market leaders are doing 40-50 miles longer range or even more, is a place you don’t want to be at.

Yeah, I think you’re right. Also we may be in for a charger standard shakeout, although my gut tells me what will really happen is all the plug types at each “pump.”

I’m thinking lease right now, and by that time the bugs should be worked out (or termination of, or a decent competitor released) of the Mitsubishi Outlander PHEV which is what our family actually needs.

40% of vehicle models on Honda’s competitive EV list… SOLD OUT til 2014! CR is too late, as not availavle to purchase, nor lease in 100% of U.S. market. Will Honda & Fiat step up production of the Fit EV & 500e? Not likely…

Good news for Ford, GM, Nissan and Tesla that have committed to higher production volume. If a potential customer (and there appears to be a larger number), these manufactures will be the ones selling (& leasing) EVs over the next six months. More sales means more customers, more learning to build a better product, and greater volume to evolve economics/technology.

Who says I can’t mod my leased cars? If I decide to turn it in, all I have to do is take the mods off. Or if the honeymoon’s not over, buy the car for the residual amount and avoid the disposal fee if there is one. Or trade it in with the mods for a new ride before the lease is up; that’s what I did with my last lease (no mods, it was a Toyota Sienna), and captured over $1000 of equity toward the next car. Most leases are structured nowadays to provide positive equity in the vehicle starting six months before the termination date.

It should be obvious to anyone who has purchased a computer or smart phone, that leasing an EV is a smarter move than buying first gen EV technology.

It is also Interesting how CR pointed out that leasing a loaded Ford Focus Electric with 6.6 charger, navigation, MyFordMobile, Premium stereo, MyFord Touch with voice activated controls, comes out to just $36/mo more than leasing a base Leaf S with the 3.3 charger, no navigation, no carvings, base stereo, no voice control, etc.

I seriously considered a Focus EV. I liked the idea of supporting a US manufacturer (and one that didn’t need bailout money). First there was the 2012 Spokane Auto show, where there actually was a Focus EV up on a pedestal (you could not sit in it), accompanied by lots of misinformation from EV ignorant salespeople. I asked about availability, and was told Portland and Seattle would get them first. Before I executed a Leaf lease in Dec. 2012, I wanted to compare the Focus to the Leaf, which I had already test driven 3 times. Guess what? There were none in the Spokane area. So I leased the Leaf. It is now July, 2013. Today, I swung into the Nissan dealership for an opportunity charge. The dealer also sells Ford. I asked if they have had any Focus EV’s. Answer – No, have not had one come in yet.

CR may extoll the value of a Focus EV lease. In this market, the Focus EV might as well be a California compliance car. To those of us who don’t have access to the Focus, there is no value, and I suspect this is not the only market without access to the Focus EV. Ford can play their EV cards anyway they see fit, but for me they are not currently a viable choice for a BEV. Nor, for that matter, are Honda or Fiat/Chrysler. We’ll have to see just how aggressive GM is about getting the Spark into all markets. To me, the Honda comparison chart is only valid in those states where all of those vehicles are available, and isn’t really relevant to a large segment of the population. Same with the supposed value contention by CR for the Focus EV vs. the Leaf.

Personally I buy all my EVs, and I have no issues with people wanting to lease-lots of valid reasons. The only thing that drives me a little nutty is that it seems many EV lease-owners are in two opposite camps on electric vehicles at the same time:

A) leasing an EV makes good financial sense over purchasing that same EV for reason A, B, C

B) an EV is a great value/comperable/cheaper to a ICE because of the fuel savings over time ie) a Volt is equal to a Chevy Cruze after 9 years of ownership – Volt window sticker says you save $6,850 over 5 years but you only own it 3 years

…you can’t be in both camps, you have to pick one.

An EV lease makes driving a EV more accessible to the masses, but leasing also rips out any “value proposition” of an electric vehicle over a comparable ICE purchase

Again, I have no issues with leasing per se, it gets A LOT more people into EVs and that is a good thing.